European equities down for third day

THE THREAT of an excruciatingly slow collapse of the euro zone continued to weigh on equity markets across Europe yesterday, as a brief rally gave way to weaker sentiment at the close of markets.

More positive trading in the afternoon was undone after a report from Reuters suggesting that the European Central Bank had stopped lending money to some Greek banks.

The ECB later confirmed in a statement that it had cut off its monetary operations with the banks pending their recapitalisation, which it said it expected would be soon finalised.

The move came on a day when ECB president Mario Draghi acknowledged for the first time the possibility of a Greek exit from the monetary union.

The day was also marked by Greece’s instalment of a senior judge to take charge of an emergency government that will lead it into new elections on June 17th and efforts by politicians to persuade Greek investors not to pull their deposits from banks.

DUBLIN

THE ISEQ finished flat, with a number of key stocks losing ground and cancelling out the efforts of the gainers.

Building materials group CRH closed down 0.9 per cent at €13.78, while paper and packaging company Smurfit Kappa fell 2 per cent to €6.30.

Among the climbers, titanium miner Kenmare advanced 5.9 per cent to 56 cent, Paddy Power gained 1.9 per cent to close at €47.34 and food group Kerry rose 1.5 per cent to €33.30.

Banking stocks were weak in line with the rest of Europe, while Independent News and Media slipped 1 cent to 27 cent.

Drinks group CC fell 1.8 per cent to €3.52 on a day when it reported full-year results in line with expectations and said it would not confine itself to the beer and cider sectors when considering future acquisition targets.

LONDON

BRITAIN’S BENCHMARK FTSE 100 index fell to its lowest closing level in more than four months, as new fears about the Greek banking system killed off a brief afternoon rally on the market.

The FTSE 100 closed down 0.6 per cent on a day when the Bank of England warned that the euro zone was “tearing itself apart” to the detriment of the UK economy and cut its domestic growth forecasts for this year to 0.8 per cent, from 1.2 per cent, as a result.

Heavyweight mining stocks led the FTSE’s fall, as global mining leader BHP Billiton said that commodity markets could cool further.Fresnillo was the worst-performing stock, falling 4.1 per cent, while Glencore dropped by 1.9 per cent and Polymetal International closed down 1.4 per cent.

EUROPE

EUROPEAN STOCKS dropped for a third day, to their lowest level this year.

Greece’s ASE Index fell 1.3 per cent to its lowest level since February 1990.

National Bank of Greece tumbled 13 per cent to €1.22 as the country’s central bank chief said citizens had withdrawn as much as €700 million since the May 6th election.

Italy’s Banca Carige fell to its lowest since at least 1995, dropping 11 per cent to 71.5 euro cents.

Spain’s Bankia tumbled 11 per cent to €1.66 in Madrid as the extra yield investors demand to hold Spanish 10-year bonds instead of benchmark German debt climbed to a euro-era record.

However, in Paris, Credit Agricole climbed 2.2 per cent to €3.11, after tumbling 13 per cent over the previous three days.

The Stoxx Europe 600 Index slipped 0.6 per cent to 244.4 at the close of trading, having earlier advanced as much as 0.3 per cent and lost 1.4 per cent.

National benchmark indexes declined in 13 of western Europe’s 18 markets, with Germany’s DAX down 0.3 per cent and France’s CAC 40 ending up 0.3 per cent.

NEW YORK

STOCKS IN New York fell in choppy trade in the early part of trading, putting the SP 500 on track for its fourth consecutive decline as concerns about the euro zone continue to be at the forefront of investors’ focus.

Investors failed to be enticed by the minutes from the US Federal Reserve’s most recent meeting, in which policymakers kept alive the possibility of a fresh round of monetary stimulus on downside risks to a moderately expanding economy.

General Electric gained 4 per cent to $19.14, reversing earlier gains on news its finance arms won regulatory approval to resume returning some of its profit to the parent company. Such a move that could clear the way for GE to accelerate stock buybacks and raise its shareholder dividend.

Facebook boosted the size of its initial public offering by 25 per cent and could raise as much as $16 billion as strong investor demand for the social network trumps debate about the company’s long-term potential to make money. – (Additional reporting: Bloomberg / Reuters)